Obama’s climate speech sends strong signals to investors

Thousands of words of of commentary and reaction have been published in the wake of Obama’s speech on climate change last week at Georgetown University. The White House has also published a useful infographic summarising the Executive Branch’s actions and goals which were set out in the speech.

The speech has been received in every possible manner: it’s been described as the best speech ever given on the subject by any president (Al Gore) and a masterpiece of disinformation aimed at destroying American business (most Republican politicians), unsurprising considering that 70% of Republicans (125 members) in the House of Representatives and 65% (30 members) of the Senate Republicans, including 90% of the Republican leadership in both houses, deny the basic scientific evidence of climate change.

Of course there are details we could nitpick, but here at Accessible Clean Energy, we thought the speech was exciting – it emphasised the importance of tackling the dual challenges of cleaner energy generation, as well as a reduction in energy consumption through increased efficiency and energy conservation. The goal of increasing generation of electricity from renewable sources, as well as increasing funding for clean energy technology research by 30% are both great to hear, though the inclusion of nuclear energy in that mix makes us wonder exactly how the funding will be distributed.

We wanted to highlight two points Obama raised specifically related to investment in clean energy by the private sector and institutional investors.

The first came towards the end of the speech – Obama specifically called for divestment by “educational and religious institutions, city and state governments, and other institutions that serve the public good” from fossil fuel companies, part of the Go Fossil Free movement championed by campaigns such as 350.org and the Responsible Endowments Coalition. In front of a crowd of university students at a leading US university with an endowment of US$1.14 billion, this call for divestment is a powerful endorsement of the pressure on institutional investors to shift their money away from investments in fossil fuels.

The second highlighted that while critics of clean energy point to the existence of government subsidies, not just in the US but from governments around the world, as evidence that renewables remain uneconomical and therefore unviable on a utility scale, fossil fuel companies receive billions of dollars in government subsidies of their own. Obama called for an end to these tax breaks to “the most profitable companies in the history of the world” – exactly as we ourselves highlighted last month here on this blog.

The speech was great – now we await the follow-through. Luckily, the USA isn’t the only country in the world making the right noises on climate change – we are particularly heartened by significant investment in clean energy, resulting in huge opportunities in Japan, China (beating the US in clean energy spending by a factor of 3), India, Kenya and scores of other developing countries. While we welcome positive moves in the US, as far as progress on clean energy investment goes, the world is really our oyster.